The Department of Energy and Climate Change (DECC) in the UK has published its expected proposals for the simplification of the UK’s CRC Energy Efficiency Scheme. The CRC was the revenue-neutral, cap-and-trade carbon reduction scheme introduced by the last government. The present administration has already said that the revenue will not now be circulated back to the participants, making it effectively a carbon tax.
DECC maintains that the new CRC scheme will be simpler, easier to comply with, more flexible in how businesses take part and there will be less overlap between the CRC and other government climate policies. Among the simplifications are:
• Reduce the number of fuels covered by the scheme from 29 down to four
• Move to fixed price allowance sales. Rather than cap-and-trade with annual auctions, there could be two sales per year where the price of allowances is fixed.
• Simplify the organisational rules by abolishing the need for large businesses to participate in groups which do not reflect their natural structure.
• Make the qualification an easier, one-stage process.
• Reduce the overlap with other schemes - any CCA (Climate Change Agreement) or EU ETS (Emissions Trading Scheme) site would be exempt.
The full details are here. The next step is that the main elements will be included in formal Government proposals in early 2012. Before coming up with draft legislation there will be further analyse of participant data collected in July 2011 to ensure that the simplification proposals ‘do not undermine the environmental or fiscal effectiveness of the CRC scheme’.
Well it’s certainly not a carbon-neutral, cap-and-trade scheme any more. I suspect there’s going to be a lot of comment (to put it mildly) about the proposals from various quarters and doubt we will see new legislation before 2013, leaving a great deal of uncertainty in the meantime.
This time round Intellect may have more to say about the impact on the ICT industry, since the legislation does hit the data centre sector somewhat unfairly (the organisation was a bit slow of the mark when the scheme was first under discussion). It also means a rethink for all those companies offering software to help address the CRC requirements. Arguably it makes the case for the use of a broader energy/carbon tracking solution, rather than one aimed at specific legislation.